McArthur v. Faw , 183 Tenn. 504 ( 1946 )

ON PETITION TO REHEAR. A petition to rehear is filed by McArthur in which we are asked to reconsider our opinion and set aside the decree entered herein by this Court.

The first ground of the petition is that the Court lost jurisdiction of the case after denying the petition forcertiorari directed to the decree of the court of appeals and denying a petition to rehear and reconsider that denial. A second petition to rehear was filed which the Court permitted and upon consideration of the second petition certiorari was granted and the case set down for argument.

A procedendo issued from the court of appeals, while the first petition to rehear was pending in this Court, remanding the cause of the Chancery Court of Washington County and the procedendo was filed in that court. This was an inadvertence, the clerk has advised us, and many cases (84 A.L.R. 591) hold that aprocedendo or mandate issued under such circumstances may be recalled or stayed. The latter action was taken by this Court.

While rarely entertained, a second petition to rehear has in exceptional cases been permitted and there is no rule or statute denying such authority to the Court. In this particular case some members of the Court were sick, not present when the first petition to rehear was under consideration, and the full Court being assembled thought that the second petition to rehear should be entertained, certiorari granted, and the case argued. This was accordingly done. As a matter of fact, this Court never took jurisdiction of the cause until after the second petition to rehear was granted and the writ of certiorari to the court of appeals awarded. The case not having been in this Court until the writ of certiorari was granted, sections 8867 and 10531 of the Code are not applicable to procedure here. The Court had power at the same term to correct its previous orders as to grant ofcertiorari.

Chapter 100 of the Acts of 1925 creating the Court of Appeals and providing the revisory jurisdiction of this Court does not limit the time in which this Court shall act upon a petition for certiorari directed to the action of the intermediate court. Petitions for certiorari must be filed in a limited time but no time is prescribed for the disposition of these petitions. The powers of this Court necessary to the exercise and enforcement of its jurisdiction are very broad. Section 10637 of the Code is as follows: "The court may appoint receivers, order references and issue all writs and process necessary for the exercise and enforcement of its jurisdiction."

The Court having concluded that it properly should have taken jurisdiction of the cause and granted the petition forcertiorari, and the time in which it might grant the writ to review a decree of the court of appeals not being limited, acted within its power in granting the writ upon becoming satisfied of a mistake in its former refusal. Having taken jurisdiction of the cause, the Court had full authority, under Code Section 10637 above cited, by way of exercising and enforcing its own jurisdiction to stay proceedings under the procedendo irregularly issued from the Court of Appeals.

We find it necessary to respond but briefly to the complaint directed to our disposition of the merits.

Having reached definitely the conclusion that a material condition imposed by Faw upon his acceptance of the option given McArthur was that a contract must be drawn which, in the opinion of his legal counsel, would afford him assurance that his right of repurchase would be secure against the claim of the creditors, in the event of insolvency of McArthur, so that he would, in no event, be forced to pay more than $35 for the common and $100 for the preferred, the determinable question remained whether or not such a contract was tendered, or prepared as would meet this condition, so that, in the exercise of good faith, it was incumbent on Faw to accept it. This question we answered in the negative, holding not only that the contract prepared by counsel for McArthur did not meet the approval of his legal advisers; but that it did not, in our judgment, afford Faw the essential and stipulated protection against the creditors of McArthur in event of his insolvency. It was on this ground that we held that Faw did not become bound and that a decree for specific performance was not authorized.

Despite the earnest and extended argument of learned counsel for petitioners, we are constrained to adhere to our opinion unanimously arrived at after careful consideration and consultation. We disclaimed an intention to charge either party with a purpose to defraud creditors, but that the manifest purpose of the proposed contract was to hinder and hold off future creditors cannot be successfully denied, and under authorities cited this was in contravention of the Fraudulent Conveyance Statute (Code, Section 7277) as construed in M. N.Freight Lines v. Kimbel Lines, 180 Tenn. 1, 170 S.W.2d 186. In other words if the proposed contract did not protect Faw against creditors of McArthur in event of his insolvency, it did not perform the essential function demanded by Faw. If it did this then it was void for the reasons stated.

In a supplemental brief it is urged that, in any event, oral re-argument should be allowed upon the question of the applicability of the Fraudulent Conveyance Act to the proposed continuing option agreement, this particular theory having been first advanced in the opinion of the Court. While neither this, nor other grounds of invalidity suggested in our opinion had been specifically noted in the able arguments and briefs of counsel, the defense of invalidity of the proposed contract was directly made and argued. This Court has merely suggested additional reasons for the view that a contract had not been and could not be drawn which would protect against the claims of creditors of either party in case of insolvency. An extended discussion has been submitted by counsel of these questions in these petitions before us, and we are not of opinion that the Court could be further aided by oral argument.

The petition to rehear must be dismissed.